SBA Issues Report on Diversity Trends in Small Business Investing

WASHINGTON, Oct. 13, 2016 /PRNewswire-USNewswire/ -- Today Maria Contreras-Sweet, Administrator of the U.S. Small Business Administration (SBA) and the voice of small business on President Obama's Cabinet, heralded the release of a groundbreaking SBA study showing the racial and gender makeup of investment boards is tied directly to investment decisions they make, especially with regard to the race and gender of the owners of companies in which they invest.

Contreras-Sweet highlighted the importance of the findings, saying, "I have made it a top priority as SBA Administrator to ensure that firms led by women and underrepresented groups are able to reach their full potential. I know some of these challenges firsthand. Unfortunately, start-ups owned by women and minorities often face an even more daunting challenge accessing the capital they need to grow and prosper. This study confirms that challenge but it also shows that we can expand opportunity and increase our overall economic strength by ensuring more women and underrepresented groups are in a position to make major investment decisions."

The report was produced by Dr. John Paglia, associate dean and professor of finance, Pepperdine Graziadio School of Business and Management and Dr. David T. Robinson, professor of finance at Duke University Fuqua School of Business, senior strategist for research for the Duke Innovation & Entrepreneurship Initiative and an advisory board member for the Private Equity Research Consortium. Underlying research was conducted by the Federal Research Division of the Library of Congress. It can be found here: https://www.sba.gov/sites/default/files/SBIC-Diversity-Report.pdf.

"The Small Business Administration and Administrator Maria Contreras-Sweet are to be commended for seeking to find answers to challenging questions regarding lending patterns to women and minority-owned businesses and return on investment for SBICs," said Paglia.

"There is still more to do, but from this research, it is clear women and minority leaders at small business investment companies play an important role in bridging a lending gap to women and minority-owned small businesses. Identifying these relationships at the investment company level helps to close that gap, and we're honored to lend our expertise in private capital and finance to this important effort to promote diversity in small business financing."

Robinson added, "Our understanding of the inner workings of private equity markets, especially those that serve the small and mid-market sector, is still very much in its infancy. Being able to study an initiative like the SBA's SBIC program gives us new perspectives on how this market operates."

During the event, Contreras-Sweet also announced a new public-private partnership with LinkedIn and other organizations called Open Network for Board Diversity (ONBOARD).  This coalition will work to expand the presence of underrepresented groups on high growth small business advisory boards, boards of directors and increase diversity in small business leadership, particularly for those supported by Small Business Investment Companies (SBICs).  

Contreras-Sweet added: "I am pleased to announce SBA's new partnership with LinkedIn as a major step toward building diversity on corporate and investment boards and closing the investment gap for women and people of color who start a business here in the U.S."

With over 450 million members and more than two million groups using its service, LinkedIn is able to provide a platform to convene organizations and leaders who have committed to increasing access for diverse candidates to join boards. Active members of the group will benefit from exposure to Small Business Investment Companies (SBICs) and member institutions as well as information and insights shared by other members of the group. As a community-led initiative, the partner organizations will be able to help contribute and curate relevant content and participation. 

Media contacts:

For SBA Administrator and other officials, contact Tiffani S. Clements at (202) 401-0035
For Dr. John Paglia (Pepperdine), contact Lisa Perry at (310) 568-2314
For Dr. David T. Robinson (Duke), contact Greg Phillips at (919) 452-3120

Internet Address: http://www.sba.gov/news
Release Number: 16-77

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SOURCE U.S. Small Business Administration

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